Australia’s financial services regulator has started penalty proceedings against RACQ Insurance Limited (RACQ). The regulator alleges the firm misled customers in product disclosure statements about pricing discounts. Up to 500,000 members are expected to receive refunds, with RACQ reporting the total cost could reach up to $220 million.
“We allege that RACQ misled its customers about the discounts to which they were entitled,” said ASIC deputy chair, Sarah Court (pictured above), in a media release this morning. “The failure by insurers to deliver on pricing promises is a key priority for ASIC and we will continue to take enforcement action to hold insurers to account in this regard.”
In the release, ASIC said the firm’s statements were misleading because the discounts were only applied by RACQ to the base insurance premium and not to additional premiums paid for certain optional extras.
‘RACQ is not the only insurer to have reported pricing failures to us,’ she Court, about the self-reported pricing failure reported by the firm.
She said pricing failures are an industry-wide issue and mentioned a previous ASIC action Insurance Australia Limited. Court called for “a general improvement in insurers’ risk and compliance management arrangements” to ensure delivery on pricing promises.
The release said RACQ has “updated” its product disclosure statements and committed to a remediation program “for a range of pricing promise failures, not limited to those failures outlined in this release.”
RACQ is a subsidiary of the Royal Automobile Club of Queensland, a mutual organisation owned, according to its website, by 1.7 million members.
The ASIC release said, by gross written premium (GWP), RACQ is ranked eighth for motor vehicle and 10th for home insurance in Australia.
